A bill including modifications to tax laws governing depreciation of IT equipment -- which some say could jump-start new technology purchasing and give the IT industry a much needed boost -- hit a roadblock in the U.S. Senate on Wednesday.
The Democrat-sponsored bill, called the Economic Recovery and Assistance for Workers Act of 2001, included provisions for allowing companies to immediately expense 10 percent of the cost of certain equipment -- including software, hardware, and telecommunication products -- instead of having to depreciate the entire amount over a five year period, as current law states. That provision was designed to spur immediate spending on goods such as computers, which would give IT vendors' sales a needed jump start.
The measure, totaling US$73 billion in proposed savings, also included a tax credit for broadband-service consumers and businesses, a $10,000 increase in the amount that small businesses can expense for purchases to $35,000, and reinvestment incentives for businesses affected by the Sept. 11 attack on the World Trade Center towers.
The Senate Finance Committee passed this version of the bill on Nov. 8. But Senate Republicans blocked the bill from coming to a vote on Wednesday, because they were opposed to the way in which some of the bill's proposed unemployment and health insurance benefits would be realized and because they wanted deeper tax cuts.
The Bush administration has publically urged Congress to come to an agreement over such a package, placing its preference on an economic stimulus bill that the House of Representatives passed last month that emphasizes tax cuts over government spending.
"We believe that if we're seriously interested in stimulus ... that absolutely the best way to go is through tax relief," said Vice President Dick Cheney in remarks he made to the U.S. Chamber of Commerce on Wednesday."Tax relief is efficient. Spending programs come with strings attached."
Senate debate over the economic stimulus proposal is expected to continue, although Congress will break for the Thanksgiving holiday at the close of Friday.
More information on the Economic Recovery and Assistance for Workers Act of 2001 can be found at the Senate Finance Committee's web site http://www.finance.senate.gov/.